US response to India’s business with Iran and Russia

  • It was expected that sanctions would be imposed on India following its decision to keep doing business with Iran and Russia in contravention of US sanctions. However, the US’ response brings uncertainty.

    From 5 November the remaining US sanctions on Iran come into force. Many media sources report this to be 4 November but to be clear, the 180 wind-down period ends at 23:59 on 4 November. These remaining sanctions include a prohibition on purchasing oil from Iran. Despite this, India announced its intention to continue buying Iranian oil.

    Given Donald Trump’s strong rhetoric on the JCPOA and the importance of re-imposing sanctions, it seemed inevitable that India would not escape enforcement action for continuing business with Iran. However, the US has not responded as strongly as expected, with Donald Trump conceding that India has energy needs to fulfil and the US Secretary of State mentioning that the US would consider waivers for purchases of Iranian oil providing there is a decrease in volumes, eventually reducing to zero.

    India has also signed a circa $5 billion deal to purchase S-400 air defence systems from Russia. This transaction does not comply with CAATSA and there was a question over whether the US would grant India an exemption. The US appeared to react more aggressively to this news than India’s dealings with Iran, making it clear India could face sanctions. More recently however, it has been reported by Indian media that the US has informally offered an exemption if India purchases US fighter jets.